Packard Bell Nec To Cut 1,000 Jobs In America

Packard Bell NEC Inc, a US unit of NEC Corp, is likely to cut slightly more than 1,000 jobs to further boost its business efficiency, Japanese business daily Nihon Keizai Shimbun said in its edition yesterday.

The unit, based in Sacramento, California, is expected to formulate a cost-cutting plan in January that will include slashing a little over 1,000 people from its current work force of about 6,000, the paper said. NEC asked the unit to strengthen its restructuring efforts, the paper said.

The unit has been suffering from a large loss due to intensifying competition in the US personal computer market, it said. The paper quoted an unnamed NEC official as saying the restructuring plan that Packard Bell NEC had drawn up in the past was "insufficient". The US company has already reduced its work force from 8,000 a year ago, the paper said.

 

No NEC officials were available to comment on the report due to year-end holidays. Last week, NEC said it would provide $300 million yen in support to the US unit and that 20 percent of the amount would be guaranteed by France's Groupe Bull SA.

NEC senior executive vice president Seijiro Yokoyama told a news conference last week that NEC would boost its share of stock with voting rights in the US unit to 49 percent from the present 19.84 percent. Groupe Bull owns 12.62 percent of the voting stock.

Yokoyama said earnings at Packard Bell NEC were growing more slowly than expected due to a rapid decline in personal computer prices, adding that part of the infusion of funds would be used for day-to-day operations. Yesterday's Nihon Keizai said half of the $300 million in aid would be provided by the end of this year but the other half would be extended after February after NEC examines the unit's restructuring plan.

It will be the fourth time the unit has received cash from investors in the past two years. Yokoyama said NEC aims to make an initial public offering of shares in Packard Bell NEC by the end of 1998. He said NEC had deliberately kept its voting rights below 50 percent because it wanted to list shares of the unit as a US company under the leadership of US managers.